Slide 1

The entire retail industry has been facing downfall ever since the post GST in 2015. As a result
the subsector which is Hypermarket also been facing downfall from 2015.

However, it you take a look the figures of retail industry. It managed to recover from 2018. Yet
the hypermarket sub sector still faces negative growth rate. There are several reasons for this
downfall.

Slide 2

 The retail industry faced a worse growth in 2015 since the financial and economical crisis
in 1998. This was the negative effect due to the GST implementation.
 Malaysian Ringgit weakening is also another main reason. It affected costs of goods due
to higher import costs. Higher import costs affected all retail sectors, from grocery stores,
to Hypermarkets etc.
 Rising cost of living has also deteriorated the purchasing power of Malaysian consumers.
 Unemployment is another reason for the decline of the sales in the retail industry. As you
can see it increased from 2015 which matches with the downfall of growth rate in the
retail industry.

Slides 3

Productivity Improvement

Productivity improvement is the strategy which focusses on improved earnings through cost
reductions, increased turnover through an improved merchandise mix, and increased prices and
margins. Mostly, productivity improvement often occurs during their mature or declining stages of
their life cycles in the firms.

The strategy is more a modification of existing strategies than a dramatic new way of doing business.
Tesco should improve their productivity through reducing overheads, closing unprofitable stores,
reducing head office expenses, tightening control over inventories, and conserving working capital

Improved merchandising mix

Most stores attempt to improve productivity by increasing their turnover through a better
merchandise mix. The key is to ensure that the new merchandise satisfies the needs of the target
market while maintaining the store's desired position. Likewise, Tesco should encourage in-store
product managers and product category coordinators to introduce new items into the product
assortment on a test basis. By using local knowledge of customer needs, this ongoing testing allows
Tesco to respond quickly to changing market demands.

Pricing
Tesco is using market penetration as their pricing objectives still there are changes to be made. Tesco
should focus on a sophisticated information technology system to achieve significant cost reductions
in its distribution system. Information obtained from the company's point-of-sale scanners in their
supermarkets allows the firm to measure the contribution of individual products to profitability.
Tesco should use the information technology to achieve productivity improvements through reducing
costs and improving the merchandise mix. As well, the company should process virtually all its
orders with suppliers through electronic data interchange, resulting in significant cost savings.

Price and Margin Increase

Price and margin increases can be a key element in productivity-based strategies. Higher-than-normal
prices may be possible on low-visibility items or infrequently purchased products. Charging for
services such as delivery or installation may also be feasible. Tesco should add high-margin items to
the merchandise mix which is a further dimension of such a strategy.

Slides 4

Customer Feedback

To improve customer service, Tesco must be able to evaluate the customer’s experience. While speed
and availability of assistance are universal, other factors can turn a shopper into a loyal customer. It is
not enough for employees to be motivated and care about the products they sell; consistency in
personnel is also critical. Turnover in managers and sales staff undermines customer loyalty.

Tesco also should give the quicker customer feedback and criticism analysis which is the most
important and effective way to improve company’s reputation and better service. As a retailer analyst
proposed that, “The best thing to do with a bad review is to respond to it”. So, the developer team of
Tesco should concern about the customer critics and respond them in positive way. Tesco also should
come across as trustworthy which means being transparent and open; reacting in the right way to
negative posts and comments rather than trying to cover their back with retailing-spiel which could
end up encouraging trolls. After research the critics they should resolve the issues as soon as
possible.

Place

Companies often blindly follow their rivals from city to city or country to country without analyzing
whether that same situation is right for them. Tesco should analyze their priority in terms of market
share, customer demand and others factor to improve their location strategy; either it is going to help
them to achieve the requirement set by the customer demanded or not.

Slides 6
The core purpose is to create value for customers to earn their lifetime loyalty. Everything
TESCO does, every innovation they bring to the market, every business decision they take,
should be driven by the customers. The underlying aim is of course to make higher profits, but
there should be clear focus on customer service at the top level of the company. The customer
feedback strategy in the market mix which previously discussed will be helpful for this strategy.
This will surely help to boost the sales of Tesco.

Slides 7

Marketing Penetration strategy is very important for Tesco because retaining existing customers
is cheaper than attracting new one.

In order to achieve higher sales, Tesco has a three way strategy. First, Tesco can always take
customers from other competitors like Gaint, Econsave, Aeon etc. Second, by providing the
quality product and higher level of services, Tesco could attract and keep more customers, where
these Tesco’s customers feel that Tesco is the best service provider. This situation makes the
distinction among Tesco and other competitors. Third, attracting to more non-users of products
and services to some business, by using of advertising and promotion or other marketing
strategies, these would be capable policies.

Tesco can get access to the lowest cost materials for supply and efficient production to influence
the retail market. By recognition of low cost supplier, it will be a privilege for Tesco to offer
goods and services to its customers benefitting at cheaper prices in the country. This will help to
create more loyal customers for the brand.

Slide 8

Facebook

 Tesco has a strong community on Facebook who are active and aware they can
communicate with them. Tesco could attract more customers by holding competitions,
sharing their customer’s creations and rewarding their customers at random times. Just as
word of mouth is a form of marketing Tesco can also market themselves through their
customers. By reposting things that their customers have done or made from Tesco, the
company is able to market itself to not only those in their community but also those of the
customer's community on Facebook. This would encourage them as they are receiving
recognition from the brand and therefore become more socially integrated within the
Tesco community and engaging them emotionally.

Slides 9

Twitter
  In order to ensure Twitter platform is used for positive feedback Tesco should consider
reaching out to customers by engaging them cognitively. Asking specific questions
regarding things that Tesco can offer for example, ‘What is your favourite juice to drink?’
Then replying to the customers and informing them of offers they have available, so the
reply would be 'Luckily we have your favourite Juice in store for Rm2 or try Heaven
Earth Ice Lemon Tea today for RM1 discount price!’ This would not only entice the
customers but would also make them reach out to the brand in hope of help rather than
complaining. It would also mean that the brand wouldn't have to work as hard in reaching
out to their customers.

Instagram

 Instagram's platform is used for sharing pictures and video's, though Tesco have lot of
video for them. In effort to engage their customers Tesco should create more content with
mini how to videos of recipes. The content of the video should be visually pleasing so
that it leaves the customer wanting what is being advertised. This in turn would cause
them to act or be inspired upon what they have seen and as a result of it may find
themselves going to Tesco to buy the ingredients even if it is not to make the actual
recipe.